The Finnish version of this blog can be read on the Lapland University of Applied Sciences web page [LINK]
Technology risks as part of companies development work
High-tech companies face various strategic business risks in their development work. Technology risk, which is part of a company's internal risks, “includes all undesirable events related to the utilization of technologies and technology decisions” (Peltonen 2002). In the worst-case scenario, the realization of a technological risk will result in the company falling into a technological “dead end”. This makes it difficult and expensive to move to new technologies and operating models. In the worst case, the company will face significant financial losses, which will prevent it from obtaining the necessary financing. (Rousku 2017.)
The technological risk of digital innovation for large industrial companies and SMEs is the disappearance of certain technologies from the market. The same problem has been experienced in the projects and development work of the New Industry research group, which conducts research and development work at Lapland University of Applied Sciences.
The reasons for the disappearance of a particular technology from the market can only be guessed. For example, changes in the business of a manufacturing company, an unfinished or prematurely announced product, and outdated technology, as well as mergers of companies, may affect the disappearance of certain technology from the market. This blog post provides a couple of examples of the risks of technology disappearance and dead ends.
Technological know-how as a boost of companies’ development work
According to the large industry company and SME interviews of the DigiProcess-project (1.10.2019 - 30.9.2022), high technological know-how has accelerated the access of SMEs and micro-enterprises to be partners and develop new products and services to improve the production of large companies.
High-tech companies want to stay at the forefront of the market, so the development of product and service innovations is vital to them. With the development of digitalization, companies want to take advantage of the latest technology available on the market and use it as part of their innovations. Companies want to provide customers with products and services that incorporate the best possible technology. Without the latest technology, the company's technological gap will grow significantly compared to other companies (TechRepublic 2021).
According to large company interviews, development work hasn’t always succeeded. There have also been failures when partner companies have searched their way in the development of digitalization. However, failures have “contributed to the company’s digitalization”.
Interviews with large companies revealed a case where a particular technology was discontinued by a manufacturer. According to a representative of the large company, “we face the technology dead-end and the technology wasn’t longer available”. The technology was used in an Augmented Reality (AR) project using Google Tango's position and motion-tracking technology.
According to a large industry company, Interviews Google Tango's software and technology platform are no longer supported or developed. Google discontinued its Augmented Reality (AR) Tango software platform, which was no longer supported after March 1, 2018. (Kastrenakes 2017.)
A few years ago, similar challenges were faced in the projects and development work of the New Industry Competence Group of Lapland University of Applied Sciences as in companies. One project investigated augmented reality and its application, using the Google Tango software platform and compatible devices.
Unfinished product on the market
Companies use resources to develop new products and services, but SMEs or micro-enterprises do not get the finished product ready for customers as planned. The product needed for development work, such as Google Glass smart glasses, was no longer sold to consumers (Tsukayama 2015). One SME had introduced Google Glass in its development work, so in this case, both technological and financial risks materialized.
Google Glass (Figure 1) goes on sale in 2014, and in 2015, Google announced it would stop producing glasses. (Wikipedia 2021.) It turned out that the glasses weren’t yet fully finished and acceptable for consumer use (Lehtiniitty 2017). However, Google did not completely stop producing glasses. In 2017 Google released the next model for business use, Google Glass Enterprise Edition, and later in 2019, Google Glass Enterprise Edition 2. (Wikipedia 2021.)
Figure 1. Google Glass (Wikimedia Commons 2020.)
Difficulties in predicting the future
The future cannot be predicted, one can only speculate on the direction of future development. It isn’t possible to know in advance whether or not there will be risks in using a particular technology. However, development work on different technologies need to be done in both companies and the university of applied sciences. Development work and failure in it, is not irrelevant, because we can learn from it. However, it contributes to the direction of digitalization development.
The financial risk arising from technological risk is much more serious for micro-companies and SMEs than for large companies, which have more financial resources to try different pilot projects. Unsuccessful projects and the disappearance of technology from the market don’t overthrow a large company but can lead to a small company into financial distress and business failure.
The most important thing, however, is to notice and abandon the wrong technological direction in time, and not waste resources too much for development work, which does not lead to success. It is necessary to consider the mistakes made, to learn from them, and to take advantage of the aspects of the technology that were used in the project in question. Past knowledge can be useful in developing new digital products and services.
Main contact and inquiries:
Leena Parkkila, Project Engineer, Lapland University of Applied Sciences, firstname.lastname@example.org
Kastrenakes, J. 2017. Google’s Project Tango is shutting down because ARCore is already here. The Verge Dec 15, 2017. Viitattu 16.11.2021 https://www.theverge.com/2017/12/15/16782556/project-tango-google-shutting-down-arcore-augmented-reality
Lehtiniitty, M. 2017. Yllättävä julkaisu: Google Glass -laseille ensimmäinen ohjelmistopäivitys kolmeen vuoteen. Mobiili.fi 21.6.2017. Viitattu 12.11.2021 https://mobiili.fi/2017/06/21/yllattava-julkaisu-google-glass-laseille-ensimmainen-ohjelmistopaivitys-kolmeen-vuoteen/
Peltonen, K. 2002. Teknologian valinnassa piilee monta riskiä. Tekniikka & Talous. 26.9.2002. Viitattu 12.11.2021 https://www.tekniikkatalous.fi/uutiset/teknologian-valinnassa-piilee-monta-riskia/f17d5787-f116-30ea-abd6-1c48c1c6daf4
Rousku, K. (toimittaja). 2017. VM 22/2017 Ohje riskienhallintaan – LIITTEET 1 – 6. Valtionvarainministeriö. Viitattu 17.11.2021 https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/80013/Liitteet_VM22_2017.pdf
TechRepublic, 2021. Digital transformation: A cheat sheet. November 5, 2021 Viitattu 12.11.2021 https://www.techrepublic.com/article/digital-transformation-a-cheat-sheet/
Tsukayama, H. 2015. Google will stop selling Glass to the general public. But Google says the device is not dead yet. January 15, 2015. The Washington post. Viitattu 19.11.2021. https://www.washingtonpost.com/news/the-switch/wp/2015/01/15/google-will-stop-selling-glass-to-the-general-public-but-google-says-the-device-is-not-dead-yet/
Wikimedia Commons. 2020. File: Google Glass Main.jpg. Viitattu 16.11.2021 https://commons.wikimedia.org/wiki/File:Google_Glass_Main.jpg
Wikipedia. 2021. Google Glass. Viitattu 17.11.2021 https://en.wikipedia.org/wiki/Google_Glass